It'll buy back bad mortgages and pay billions in cash to Fannie Mae

Under its terms, BofA will repurchase $6.75 billion in distressed mortgages sold by Countrywide Financial to Fannie Mae between 2000 and 2008. The bank will also pay $3.6 billion in cash to Fannie Mae, the Los Angeles Times noted.

During the financial crisis, Fannie Mae and its compliment, Freddy Mac (PINK:FMCC), needed U.S. government bailouts after losing billions of dollars on failed mortgage loans.

Federal regulators accused BofA, along with a number of other banks, of selling mortgages that had been issued to poorly qualified borrowers, which increased their default rates. Bank of America purchased Countrywide Financial in 2008.